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08-26-2008 EDAMEDA Board of Directors Meeting Minutes 11:30 AM Tuesday, August 26, 2008 (Rescheduled from August 22 "d) Members present in bold print: Members Tim Ulrich Diane Gordon Steve Jansick Casey Stotts Jim Haugen Mike McGraw Staff Ken Merrill, Finance Director Miles Seppelt, EDA Director Call to Order Tim Ulrich called the meeting to order at 11:30 AM. II. Approve Agenda No action. III. Review Meeting Minutes A. July 25th Board of Directors Marc Vaillancourt M /S /P: Jansick, Ulrich to approve the July 25th EDA Board minutes as written. Passed unanimously. B. August 6th Special EDA Board Meeting M /S /P: McGraw, Gordon to approve the August 6th Special meeting minutes as written. Passed unanimously. C. July 16th Finance Team M /S /P: Jansick, Gordon to approve the Finance Team minutes of July 16th as written. Passed unanimously. IV. Review May Financial Statements — Ken Merrill, Finance Director • Mr. Merrill reviewed the EDA financial statements for the Board: • As of July 31St, the EDA had $79,425 in cash available for operations. • Rental income of $500 was received from the Wetherell Property. • The "operating supplies" line item shows a $1,039 expenditure, which was primarily the costs involved with the recent EDA Recognition Event / Open House. • $5,622 was spent on "Improvements to Land" — this was reimbursement for expenses related to construction of a drainage swale behind the charter school and EDA lot on 5th Avenue. • The Economic Development Loan Fund currently has $99,275 in cash available. Loans to Warrior Mfg. and Ashwill Industries are performing as required. • The Downtown Revolving Loan Fund currently has $321,783 in cash available and holds mortgages totaling $753,413. A loan in the amount of $46,703 is not reflected in this total as it went out in August. • The MIF Loan Fund has cash available of $28,600 — reflecting loan payments by Warrior Mfg. The Loan to Customer Elation will go into repayment starting September 1St • Total assets in the MIF loan fund currently total $440,466. • The City just received another $136,090 for this fund which will be reflected in next months financial report. M /S /P: McGraw, Gordon to approve the EDA Financial Report as presented. Passed unanimously. V. Director's Report A. Cenex Project • Demolition of the buildings on 3�d Avenue is complete and the wreckage should be removed by the end of today. • Over the next two or three days contaminated soils will be removed and replaced with clean fill. B. Customer Elation Call Center ■ $372,000 of the $500,000 loan has been disbursed (about 75 %) and the remainder should be disbursed within the next couple of weeks. ■ Our loan with Customer Elation will go into repayment status on September 1 St ■ The company expects to hire about 20 additional people over the next 2 -3 months. BR & E Visits • RD Machine • Hutchinson Mall • 3D C -N -C C. County EDA • We are in the process of pulling together an "Exploration team" from around the county that will formally evaluate the feasibility, proposed activities, funding mechanisms, etc. for a county EDA. • Hopefully the team can have its first meeting within a month and finish its work within 90 days after that. D. Business Incubator • Ridgewater College is busy refurbishing the "Ridgewater East" building in the industrial park and hope to have it open this fall. • To this point it seems that Ridgewater College does not have a strong interest in putting together any entrepreneurial effort beyond the building itself, so Duane Hoversten, Anthony Hanson, Bill Corby and EDA staff have been working on that aspect of the incubator initiative. E. Company "X" Update ■ The company is preparing detailed specifications for the facility it will need here in Hutchinson. They are currently working with 3M to pull together the information they need to complete that process. F. New Retail • Best Buy is coming to Hutchinson and will be building a new 25,000 sf store just north of the existing (and vacant) former Office Max Building. • Best Buy had no interest in an existing building — they want their new building to be LEED certified, meaning built to the highest environmental and energy efficiency standards. VI. Industrial Park — Funding Options (Discussion) Staff updated the board on the status of acquiring the Hackbarth land for future industrial park space: • Total size of the parcel under consideration is 74.5 acres — with 68 acre north of 5m Avenue and an additional 6'/ acres south of 5th Avenue. • At $15,000 per acre this would total $1,117,500, excluding interest. • The city is looking at a 5 -year contact - for -deed (the maximum allowed) and has proposed an interest rate of 5 %. Annual payments would be $207,772 for 5 years. • Potential funding would come from the Excess Bond Fund, projected property sales and — if needed — possible sale of the Stritesky property. • Infrastructure costs to open up the first section of the new industrial park (about 42 acres) would total approximately $969,775. • Funding for infrastructure could potentially come from City Improvement Bonding, Deferred Assessments, assessments on neighboring properties and, if approved, a Business Development Infrastructure grant from the State of Minnesota. Discussion followed. Key points included: We may wish to consider a lower annual amount on the contract - for -deed with a balloon payment in Year 5. Every effort should be made to retain the Stritesky property — as it will still be needed for industrial development in the future. Once we hear back from the Seller, a special meeting of the EDA Board may be necessary. VII. Downtown Gateway Funding Staff updated the Board on the status of the Downtown Gateway project. Two grant proposals have been submitted and we are waiting to hear the results. In the meantime, some small steps are being taken to stabilize the site. If possible, we'd like to get grass planted on the lot this fall. M /S /P: Jansick, Gordon to authorize $2,000 for site revitalization on the former Pet Clinic lot as part of the "Downtown Gateway" initiative. Passed unanimously. The EDA may consider additional funding as the project develops VIII. Incubator Project: Appointment of Steering Committee EDA staff updated the Board on the status of the business incubator project. Ridgewater College is in the process of renovating the " Ridgewater East" building to house agencies that assist businesses, Ridgewater's Customized Training and Small Business Management programs, the SBDC and so forth. ■ It appears that Ridgewater's focus is primarily on the building itself and the programs that would be housed there. Interest in a true incubation program — which includes activities that go beyond the walls of the building itself — appears to be limited. ■ To gauge the need and desire for a broader, more regional, entrepreneurial initiative a meeting of key stakeholders was being considered. Discussion ensued. It was noted that we want to be careful not to duplicate the efforts of other regional economic development agencies and initiatives. M /S /P: Gordon, Stotts to appoint Duane Hoversten, Anthony Hanson, Bill Corby and Miles Seppelt to a steering committee to explore further development of the incubator project into a broader, potentially regional initiative. Passed unanimously. IX. Grant & Loan Applications Sign & Awning Grant Oral - Facial Surgery, PA — Karen Bachman $1,321.50 16 Washington Ave. W. Suite 104 M /S /P: McGraw, Gordon to approve the grant request in the amount of $1,321.50. Passed Unanimously. X. Other Business ■ The EDA Director will be on vacation the week of September 1 -5. XI. Chamber Update Bill Corby updated the Board on the current activities of the Chamber of Commerce. XII. Set Next Meeting — September 26th ■ Several Board members expressed an interest in switching the regular EDA Board meetings from the fourth Friday at 7 AM to a Noon lunch meeting during the fourth week of the month. Staff will canvas the board members to see what works best for everyone. XIII. Adjourn With no further business to attend to, the meeting adjourned at 12:31 PM. Respectfully Submitted, Miles R. Seppelt EDA Director